EXCLUSIVE FRANCHISE AGREEMENT
THE UNDERSIGNED:
- LOHUIS BEHEER B.V., residing at Kruisweg 18, 2671 JZ NAALDWIJK, The Netherlands Tel.:+31-6-46446011 E-mail: lohuisfranchise@wxs.nl, in this handling by proxy of the brand owner , LOHUIS FZC in Ajman, U.A.E., represented by its Director Mr. Anton Hendrik Lohuis, hereinafter referred to as the "FRANCHISOR".
AND
2. Tel.: E-Mail:, represented by its Proprietor and Director Mr. , hereinafter referred to as the "FRANCHISEE".
HAVE TAKEN INTO CONSIDERATION THAT:
1. The FRANCHISOR has developed a franchise concept in the field of the manufacture and distribution and unique marketing of light sources and all other lighting products and is appointing franchisees in different areas and countries in the world. The franchise covers the use of the LOHUIS trademark for a range of lamps and lighting in a quality similar to the famous brands but at better prices.
2. The FRANCHISEE has applied to be nominated in the territory known as XXXXX, which market area will hereinafter be referred as the "TERRITORY".
3. FRANCHISOR and FRANCHISEE have studied each others possibilities leading to the fact that the FRANCHISOR is willing to appoint the FRANCHISEE in the TERRITORY and the FRANCHISEE is willing to accept the conditions the FRANCHISOR has set in conjunction with such appointment which are specified later in this agreement.
THEY NOW THEREFORE DECLARE TO HAVE AGREED AS FOLLOWS:
1. From (Date) the FRANCHISEE is herewith officially appointed as the Sole Exclusive franchisee (Sole Exclusive Agent) in the TERRITORY of all lighting products and electric items that are produced and/or made available by the LOHUIS GROUP OF COMPANIES and their associates and their suppliers. The exclusive sales rights are granted for all products packed and/or branded with the trademark "LOHUIS". Exclusive sales rights are only granted for as far as these rights have been obtained by the FRANCHISOR.
2. The exclusive sales rights given to the FRANCHISEE by the FRANCHISOR are only valid and restricted to the TERRITORY. The FRANCHISEE is allowed to sell products outside his TERRITORY, but only when there is no other FRANCHISEE in the area where sales and/or the delivery has to be made. If such another FRANCHISEE has been nominated in that area, the FRANCHISEE has to obtain approval from his colleague franchisee prior to offering the products. Only when permission has been granted, the products can be offered in which case a commission is to be paid to the colleague franchisee. The percentage of this commission is left to the discretion of both FRANCHISEES.
3. In case of disputes between FRANCHISEES, the FRANCHISOR has a final say about rules to be obeyed from case to case. If the FRANCHISOR has been consulted to set rules, then they will form an integral part of this agreement and if they are not complied with, it can be a considered as a serious breach of this agreement by the FRANCHISEE.
4. The FRANCHISEE already operates a businesses under the name of (NAME OF EXISTING COMPANY ), and he will prioritize LOHUIS branded products. He will promote the name of "LOHUIS" and " LAMP BANK " on its stationary and web-site.
5. This agreement shall, subject to the provision for the termination sited below, remain valid for an initial period of 5 years (FIVE YEARS) and therefore expire on December 31, 2013. It will however be automatically renewed each time for another period of 5 years if FRANCHISEE and FRANCHISOR have not informed the other party by registered letter at least 3 months before the expiration date about their desire to terminate this agreement at the next coming expiration date.
If FRANCHISEE OR FRANCHISOR wish to terminate the agreement at the nearest expiration date, they have to comply with the following rules of termination:
A: At the side of the FRANCHISEE
The FRANCHISEE can terminate the agreement by writing a registered letter to the FRANCHISOR advising the FRANCHISOR of his desire to end this agreement in its entirety or the desire to sell the franchise to another interested candidate. If the franchise has been terminated by the registered letter, the FRANCHISOR will pay back the entrance-fee as described in this agreement at the date of termination agreed and the FRANCHISEE shall hand over all information about the business he has concluded of all products which are covered under this agreement such as names of the customers and the purchase made by them as well as prices paid. The FRANCHISEE will be dismissed from all his duties resulting from this agreement provided there are no amounts of money outstanding at the expiration date.
In case termination is linked with the desire to sell the franchise to another candidate, the FRANCHISEE will introduce the new candidate to the FRANCHISOR, who will accept the new candidate or alternatively will reject the new candidate but will buy back the franchise at the price the new candidate was willing to offer. If the franchise is sold with approval of the FRANCHISOR, the FRANCHISEE will pay 10% of the price obtained in excess of the amount paid for the franchise, to the FRANCHISOR.
B: At the side of the FRANCHISOR
The FRANCHISOR cannot terminate this agreement at any expiration date provided that:
1. The FRANCHISEE has not been and is not in any serious breach of this agreement.
2. The FRANCHISEE has succeeded to reach a turnover between ( $$$ TARGET $$$) per year for the first period of five years, counted from the 24th month after the date of signing this agreement.
The target represents the total FOB value of purchases from all "LOHUIS" approved supply sources to the TERRITORY.
Should the FRANCHISOR feel that the targets are not met he should be sending several warnings and discuss with the FRANCHISEE about the reasons before attempting to terminate this agreement.
3. The FRANCHISEE pays the amounts due in time or at least pays the amounts due within 21 days after a last reminder has been sent by registered mail.
6. The FRANCHISEE can negotiate with any of the supply sources the direct supply and invoicing to any customers in the TERRITORY. In such a case the FRANCHISEE can freely negotiate a commission that the supply source will pay to the FRANCHISEE as a reward for obtaining the orders. These direct imports in the TERRITORY will be treated as if they belong to the achievements in turnover of the FRANCHISEE himself.
7. The FRANCHISEE will pay a royalty to the FRANCHISOR for the use of the TRADE MARKS, the services rendered and the transfer of know-how by the FRANCHISOR to the FRANCHISEE.
This royalty (franchise-fee) is agreed as 2% on the FOB value of every order. The royalty includes the cost of CERTIFICATE OF INSPECTION to be issued by MR. ANTON LOHUIS or his representative which has to evidence the quality of the goods. Inspection expenses are included in the fee provided the royalty is at least US$ 800.00 per inspection report as if not the actual expenses of the inspection will have to be charged in addition to the royalty.
The fee of 2% is applicable to all supplies from LOHUIS companies within the LOHUIS GROUP OF COMPANIES but the FRANCHISEE has the right to order from other factories if he has evidence that those other factories can provide a better quality at same or better price than LOHUIS’ factories. In that case the FRANCHISOR will test the quality and do the same inspections at such other factories against the payment of 4% fee.
8. As a compensation for the expenses incurred at the side of the FRANCHISOR in developing franchising and as a lump sum to purchase the distribution rights for the TERRITORY, the FRANCHISEE will pay an entrance fee of ** PRICE TO PURCHASE THE RIGHTS ** which amount will be paid within 7 days after signing this agreement.
9. The FRANCHISOR will send the FRANCHISEE a limited number of all existing and new catalogues in the future. Additional quantities are available at cost. The same applies for any promotion materials and the newsletters that appear every 6 months.
10. To assist the FRANCHISEE in his promotion of the products in the TERRITORY the FRANHISOR will assist the FRANCHISEE in finding and arranging agreements with local distributors.
11. The FRANCHISEE has the right to use the LOHUIS trade mark and other symbols, insignia, distinctive designs and plans and specifications owned or authorized to be used at no other cost than the franchise fee (royalty) agreed. The FRANCHISOR and LOHUIS FZC LLC in UAE however remain to be the owner of the trademarks and other information and materials provided. Only products of good and high quality which are CE approved and are produced according to NEN and IEC norms can be branded with the LOHUIS trademark and prior written approval has to be granted by MR ANTON LOHUIS which approval will be granted if the product is found competitive to LOHUIS' own sources. Competitive means a better price for the same or better quality than offered by LOHUIS' sources. The use of the trademarks is linked with the existence of this agreement and these rights are automatically cancelled if and when this agreement is terminated.
Under no circumstances can the LOHUIS trademark be used for non electronic or electric products.
12. In case the FRANCHISEE is unable to operate the franchise for a period, longer than 3 months as a result of serious health problems, disablement or death and lack of qualified replacement management, the FRANHISOR has the right to nominate an (interim) manager to continue the business at the cost of the FRANCHISEE. Furthermore the FRANCHISOR has the automatic right to re-purchase the franchise at a value that will be determined by a certified accountant (CPA) that will be nominated by the FRANCHISOR.
13. The FRANCHISOR has the right to appoint SETMAKERS in the TERRITORY. SETMAKERS are defined as specialist companies who are selling a limited range of product to specific customers only. Approval must be granted by the FRANCHISEE.
14. The SUPPLIERS, the FRANCHISOR, and the FRANCHISEE agree together to respect the interests of every business owner in relation to this agreement and they will therefore, during the course of this agreement, not enter directly or indirectly into any business relationship with any of the employees who are at present and in the future employed by the partner in this agreement. In case one of the parties wishes to open a business relationship with such a person or with the company that such a person newly represents he will ask authorization to the party who may seen to suffer damage from the withdraw of such an employee from his company. As far as possible all parties undertake to insert anti-competition clauses in the contacts of employment that they will offer their employees.
15. The supply-sources are responsible for the quality of the products. The FRANCHISOR is willing to share the responsibility provided the order has been presented first to the FRANCHISOR before placing it to the supplier in order to allow the FRANCHISOR to confirm the specifications mutually between SUPPLY-SOURCE and FRANCHISEE and provided the FRANCHISEE has asked for the INSPECTION CERTIFICATE in the order and the subsequent letter of credit if any.
16. The SUPPLY SOURCES and THE FRANCHISOR secure to be insured and will indemnify the FRANCHISEE for damage that can occur to objects or cause injury to persons because of defects in the products.
No responsibility is assumed for any damage or injury that may occur as a result of improper usage of the products.
17. The FRANCHISOR will secure that the name "LOHUIS" as well as the insignia " that's all light " and the " Lamp Bank " are properly registered in the TERRITORY as being owned by Mr. Anton Lohuis but licensed out to the FRANCHISEE for the duration of this agreement. This will be done by KNIJFF trademark attorneys in Holland and the cost of such registrations will be born by the FRANCHISEE,
18. The FRANCHISEE can request any supply-source to brand products with the LOHUIS trade mark but only after approval has been granted by the FRANCHISOR. (See also clause no 11 above)
Failure to comply with this condition results in a penalty to be paid to the FRANCHISOR of US$ 20.000 per case and may also lead to early termination at the sole discretion of the FRANCHISOR.
The FRANCHISEE is free to sell products of other brands as long as he meets with the target of sales as set in this agreement.
19. After termination of this agreement the FRANCHISEE will no longer directly or indirectly purchase products from the SUPPLY-SOURCES not only in LOHUIS brand but also not in any other brand that the SUPPLY-SOURCES may be willing to offer.
20. If any dispute shall arise between FRANCHISEE and FRANCHISOR, the parties in this agreement will seek an amicable settlement of their differences. If no amicable settlement can be reached, they will ask arbitration and judgment only to the ARBITRATION-COMMITTEE of the INTERNATIONAL CHAMBER OF COMMERCE in GENEVA subject to the existing Rules of Conciliation and Arbitration in force. The arbitration thus obtain will be final. The sharing of expenses related to the arbitration will be as may be decided by the Arbitration Committee. It is agreed that on this agreement only the laws of SWITZERLAND will apply.
21. Should any article of this agreement be in conflict with existing legislation by the laws of SWITZERLAND it may affect such article, but all other articles in this agreement will remain in force.
Having agreed all the above, the parties involved in this agreement set their hand on ( DATE ).
FRANCHISOR FRANCHISEE
